Not naming an executor can add cost, complications
By AdvocateDaily.com Staff
“While everyone knows death is inevitable, it can still be difficult to prepare for. And as it turns out, a large number of Canadians never do. According to one survey, about half of all Canadians don’t have a will,” says Duensing, principal of Duensing Law.
Even if they have prepared a will, many of them fail to name an executor, Deunsing explains in the article.
“Each year, 90,000 individuals die in Ontario alone, leaving behind tens of thousands of estates to be administered by family members, friends, professionals, or, in rare cases, the government,” he writes.
When a person dies without a will, the law decides who will act as trustee. In Ontario, the Succession Law Reform Act sets out who, in order of priority, is entitled to act as trustee. A deceased’s spouse or common-law partner is first on the list, followed by the children, grandchildren, siblings and so on.
“While the law has an orderly process for ensuring all estates are properly dealt with, there are a number of reasons why it's preferable to name your own trustee in a will,” Duensing tells AdvocateDaily.com.
For one thing, the family member who is entitled to be the trustee may not be the best person for the job. Duensing says “being a trustee requires time, organizational skills, problem-solving abilities, and a calm temperament.”
Second, trying to find a person willing to take on the role of trustee can add considerable cost and delays to the process.
“And finally, depending on one’s family dynamics, the appointment of a family member as trustee can heighten the risk of conflict,” says Duensing.
Potrzebowski v. Potrzebowski, 2016 ONSC 6981 (CanLII), illustrates the pitfalls of not naming a trustee, says Duensing.
Peter Potrzebowski died in October 2016 without a will. As a result, his widow from a second marriage was entitled to serve as the estate’s executor. Agatha Potrzebowski was also a beneficiary of the estate, along with Peter’s two daughters from his first marriage. A dispute over the estate arose between Agatha and Peter’s daughters.
“The court recognized that Agatha could not properly continue serving as trustee while the estate litigation was ongoing. She would face a conflict of interest: as trustee, she would be legally obliged to act in the best interests of all the estate’s beneficiaries, but as an estate beneficiary, she would be inclined to pursue her own best interests in the litigation,” Duensing explains in the article.
The court noted that a person unconnected with the suit would be “the most proper person to be appointed administrator” and ordered the Office of the Public Guardian and Trustee (OPGT) to step in.
“As Potrzebowski highlights, it can significantly complicate matters to not appoint an executor. When the law determines who acts as trustee, there is an increased risk of a person not suited for the role becoming saddled with this significant responsibility — like a close family member who lacks the skills, time, or temperament to manage an estate,” writes Duensing.
He also says it’s a mistake to think that you can save money by not naming an executor.
“Indeed, the failure to do so can become quite costly, particularly if it leads to further court applications or litigation. And even where the OPGT does agree to act, this is no boon to the estate. The OPGT charges fees for its work that are roughly comparable to what trust companies in the private sector charge: six per cent of the value of the estate," he writes.
“As they say, there’s no such thing as a free lunch — not even when one is no longer around to pick up the tab."